Selling... - Posted by Bill

Posted by John Behle on October 09, 1998 at 02:09:59:

I didn’t mean to paint all “brokers” with the same brush. There is just an end of the note industry that includes some very poorly trained, ill-equiped - yet well intentioned and well meaning beginners.

Sometimes - not all the time - note sellers are strung along and lose out on the types of timely opportunities that Bill says he needs the money for. For that reason, I felt a need to point out a risk. Bill probably doesn’t have the time to have his note shopped from broker to broker to broker …

So, anyway, sorry about that brokers. Being a note investor myself, I pay the prices of all that happens to the industry. Sometimes I get tired of paying the prices caused the industry by some of the seminar mills churning out thousands of students that have been told they are qualified and ready.

Some make a spectacular success of it. Most feel cheated and give up. The bad Press is building and the industry will suffer even more.

Didn’t mean to offend the brokers out there that are making it work for them. My belief is any note broker reading this board is a level (or many) above the ones I was referring to.

Selling… - Posted by Bill

Posted by Bill on October 08, 1998 at 12:19:18:

I am a rehabber and will have 3 houses ready for sale in the next week. Since there is a wonderful auction being held next month in a nearby town (that requires cash), I would like to see the houses for the maximum cash to me in the shortest possible time. Someone suggested selling with owner financing and then sell the notes at discount…what kind of discount would that take? Any and all suggested welcomed. The houses are done to a high level and I planned on pricing them near the top of the range. They are located in middle class neighborhoods in a small town in NJ and would expect to sell for 75,80 and 140K (They are 3br/1.5 b, 3 br/1.5 b and 5br/2.5 b respectively) I was hoping to walk into the auction with 250-275K. Thanks.

Long term (large) / short term - (small) - Posted by John Behle

Posted by John Behle on October 08, 1998 at 19:09:24:

The discount is primarily determined by the terms. In particular the length of the loan. A long term note takes a large discount and a short term note takes a small discount.

The type of property, location, condition and LTV (loan to value ratio) also affect the price. Buyers discount to achieve a certain yield - like is done with bonds. The yield is based on the above factors and supply and demand (how much competition). The yields can range from 8% to 18%+ depending on the circumstances. Actually most of my yields are way above that because I buy what few others will.

So, to find out what you can get, call some buyers in your area. Try to deal direct with a local buyer, not a broker. Most of the brokers out there today are what I call the “Broke broker”. They have no funds or capabilities other than the phone number to Metro or some other “real” funding sources. Look for someone experienced, not someone who just finished a seminar a few weeks ago.

There is no standardized or required training for mortgage buyers and brokers. There are no degrees or credentials - don’t be fooled by that. Some seminar promoters try to give the public and their students a feeling of confidence and impression of competence by giving them titles and initials. The truth is, it has been the joke of the real industry for almost a decade.

Anyway, that’s an interesting conversation to have sometime, but just don’t be drawn in by it.

Find a local note buyer and have them help you structure the deals. If you need some help finding one, let me know your area and I might have some recommendations.